1993 hCa Report on the third hCa Assembly "Where does Europe end?
HCA 701: Paying for Health Care
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Transcript of HCA 701: Paying for Health Care
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HCA 701: Paying for Health Care
Private Insurance, Medicare, Medicaid & Managed Care
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RESOURCES NEEDED TO MAINTAIN A HEALTH CARE DELIVERY SYSTEM
Financing
Healthcare Professionals
Technology & Supplies
Health Care Delivery System
FacilitiesSource: Williams and Torrens, Introduction to Health Services, 2002
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Payment sources and where the money goes
Other Govt. Pgms. 12%Medicaid
16%
Medicare18%
Out-of-Pocket
21%
Private Insur. 33%
Hospital care 33% Physician care 23% Nursing home care
9% Prescription drugs
9% Other spending 26%
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Health Insurance vs. Other Insurance
Other Insurance Loss is to be avoided Losses are intended to
be independent events Loss should be
something for which we can’t adequately budget
Health Insurance Ill health can’t be
avoided Many illnesses imply a
great degree of dependency among the insured losses
First dollar base / major medical health plans violate this tenet.
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Taxonomies of Health Insurance
Basic employee coverageThe second taxonomy includes the type of
insurance provided Commercial carriers Blue Cross/Blue Shield Self funded plans Cost shifting to private plans Cost shifting to uninsured
Funding mechanism
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Increases in Health Insurance Premiums compared to other Indicators
0
2
4
6
8
10
12
14
16
18
20
1988 1990 1996 2000 2002 2005
Health InsurancePremiums
Overall Inflation
Workers' Earnings
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% of Firms Offering Health Benefits, by Firm Size
53
56
57
58
52
47
78
74
80
70
74
72
90
86
91
86
87
87
9397
97
95
92
93
59
656866
63
59
99999998
9998
0
10
20
30
40
50
60
70
80
90
100
3-9Workers
10-24Workers
25-49workers
50-199Workers
All SmallFirms
All LargeFirms
1996
1999
2000
2002
2004
2005
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Health Maintenance Organizations
Began in 1929 HMO Act of 1973 Growth has slowed
somewhat due to more enrollment in PPOs
Guarantee provision of specific services
0
50
100
1970 1995 2000
Americans enrolled in HMOs in millions
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Medicare
Title XVIII of the Social Security Act, "Health Insurance for the Aged and Disabled" is commonly known as Medicare began in 1966.Elderly aged 65 and overDisabled individuals entitled to Social
Security benefitsEnd stage renal disease.
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Medicare Part A Coverage (Hospital Insurance)
90 days of inpatient care in a benefit period No limit to number of benefit periods Use of “Medigap” (about 75% of beneficiaries)
Lifetime reserve of 60 days of care once 90 days are exhausted
100 days of post-hospitalization in skilled nursing facility (or rehab)
Home health agency benefits
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Part B – Supplementary Medicare
95% beneficiaries enrolled in Part BCoverage optionalRequires beneficiary to meet set
deductibles (Medicaid programs pay premiums for qualified Medicaid enrollees who qualify for Medicare)
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Medicare Provider Reimbursement
HospitalsPhysiciansBeneficiaries can join Medicare HMOs
Catalyst system for new prescription drug benefit of Medicare
Private insurance participate in supplemental policies (most include managed care plans)
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Medicare Regulatory Initiatives
Tax Equity and Fiscal Responsibility Act (TEFRA)
Prospective Payment System creates DRGs
Resource based relative value scale (RBRVS)
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Medicare Prospective Payment System
Standardized payment amount DRG weights Outliers Quality Indicators
Churning – multiple admissions for same patient with same diagnosis
Skimming – taking more profitable less severely ill Reducing length of stay, procedures, etc which may
affect morbidity and mortality. Financial performance
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Medicare Prescription Drug, Improvement and Modernization Act of 2003
Allows elderly and disable beneficiaries to enroll in private plans that contract with Medicare for drug benefit.
Two types of plans: Prescription Drug Plan (PDP) Medicare Advantage (MA)
Plan is an enticement to get more enrollees in Medicare Managed Care
Beneficiaries must pay monthly premium and deductible
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Medicare Rx Drug Benefit
HHS expects 29.3 million to enroll in Medicare drug plans
10.9 million beneficiaries will receive low-income subsidies
9.8 million will have drug benefits through their employers
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Drug Benefit Cost Sharing
2006 2010 2014
Average monthly premium
$32.20 $48.49 $64.26
Annual deductible $250 $331 $437
Coverage gap $2,850 3,774 $4,984
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Medicare Rx Drug Benefit
0
20
40
60
80
100
120
2006 2008 2010 2012 2014
Cost in billions
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Source: Managed Care. The Future of Medicaid. What Should Medicaid Look Like in 2010? August, 2004
U.S. Medicaid Enrollment (A Federal Perspective)
The largest health insurance program in the United States.
Provides coverage for more than 50 million poor and disabled Americans.
Spending is in excess of $300 billion a year. Accounts for 20 percent of national health care
spending. Without it, the ranks of America’s uninsured
would swell to more than 90 million, 1 of every 3 citizens.
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Medicaid
Enacted with Medicare as Title 19 of the Social Security Act in 1965
Joint program financed between the Federal and State Governments through use of matching funds for: Categories of individuals that could be covered Categories of benefits that could be covered
Today, 35 million people in low-income families, predominately children and pregnant women.
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Medicaid Dual-Eligibles: Supplements Medicare providing
prescription drugs and long-term care services for over 6 million low-income Medicare beneficiaries
Guaranteed entitlement to states and to individuals. States entitled to Federal financing when they cover
the populations eligible for coverage services they expend state dollars for on behalf of that population,
Entitlement to individuals through automatic income eligibility
No enrollment caps or limits on the coverage. Medicaid accounts for 43-44% of all Federal dollars
that go to states in the form of grants and aid.
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Differences in Eligibility by State
Eligibility for services differ State by State in amount, duration, or scope of services
State legislatures may change Medicaid eligibility, services, and/or reimbursement during the year.
Medicaid consists of 56 distinct state-level programs with federal guidelines, but administered state agencies
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Minimum Eligibility Requirements Must meet aid to Families with Dependent Children (AFDC) or--at
State option--more liberal criteria. Children under age 6 whose family income is at or below
133 percent of the Federal poverty level (FPL). Pregnant women whose family income is below 133 percent of the
FPL (services to these women are limited to those related to pregnancy, complications of pregnancy, delivery, and postpartum care).
Supplemental Security Income (SSI) recipients in most States Recipients of adoption or foster care assistance under Title IV Special protected groups All children born after September 30, 1983 who are under age 19, in
families with incomes at or below the FPL. Certain Medicare beneficiaries
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Medicaid Funding Match
Federal government matches state Medicaid spending for medical assistance state per capita income formula.
Federal contribution ranged from 50 – 77 cents of every state dollar spent on medical assistance in fiscal year 2004, including:Medicaid administrative costs (50% federal
match)Skilled professional medical personnel
engaged in program integrity activities (as much as 75%)
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Nevada Medicaid Enrollment (A State Perspective)
Adults with childrenChildren make up the largest portion of
the populationThe elderly and disabled recipients
Account for 75% of total expenditures. Biggest increase in expenditures, but
smallest increase in enrollment
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Nevada Medicaid Enrollment
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Recent Federal Actions
Federal GAO placed the Medicaid Program on the 2003 list of programs at high risk for fraud, waste, abuse and mismanagement.
The GAO specifically recommended Congress curb state financing schemes, such as Intergovernmental Transfers (IGTs).
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Medicaid & The Impact on Business
There is a growing impact on the General Fund.
The impact is significant because it means far fewer resources available for other state funded programs that are essential for commerce and economic growth.
Medicaid siphons dollars from education and transportation
Economic multiplier effect.
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Medicaid’s Impact Health Insurance
National trends propose eligibility limits and/or reducing providers rate of payment.
Both approaches increase the amount of uncompensated care and costs are allocated to private health insurance premiums through cost shifting.
The affordability of providing health care benefits to employees in the private sector creates a burden on business.
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The Balanced Budget Act of 1997
Subtitle H – MedicaidThe law contains a dramatic expansion
in state authority with respect to the use of managed care.
It enables states to require most Medicaid beneficiaries to enroll in managed care organizations (MCOs) without obtaining a waiver.
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Waivers & Managed Care Growth Managed care programs seek to enhance access to quality care in a cost-
effective manner. Waivers may provide the States with greater flexibility in the design and
implementation of their Medicaid managed care programs. Waiver authority under sections 1915(b) and 1115 of the Social Security Act
is an important part of the Medicaid program. Section 1915(b) waivers allow States to develop innovative health care
delivery or reimbursement systems. Section 1115 waivers allow Statewide health care reform experimental
demonstrations to cover uninsured populations and to test new delivery systems without increasing costs.
Finally, the BBA provided States a new option to use managed care. The number of Medicaid beneficiaries enrolled in some form of managed
care program is growing rapidly, from 14 percent of enrollees in 1993 to 58 percent in 2002.
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Medicaid Managed Care Program Successes
Managed care is the prevalent delivery system in Medicaid, with 59 percent of beneficiaries receiving some or all care through managed care instead of fee-for-service.
Forty-eight states, the District of Columbia and Puerto Rico operate Medicaid managed care programs, with about 23.1 million beneficiaries enrolled in 2002, an increase of over two million since 2001.
Enhancing access to providers and emphasizing preventive and routine care, health plans have successfully improved the quality of care received by enrollees in the Medicaid managed care program.